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Old 22nd Jun 2010, 11:10
  #620 (permalink)  
840
 
Join Date: Mar 2005
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The €10 charge certainly isn't helping though.

An airline will try to get as much out of a passenger as they are willing to pay for a flight, so in terms of airline revenues that means that they get €10 less per passeneger.

In terms of Aer Lingus, it reduces their profitability by €45 million. Even more for Ryanair, but at least Ryanair have stronger operations outside Ireland.

In terms of effect on passenger numbers, think of it this way. Imagine a route that has been planned to have a breakeven at an average fare of €145 per passenger return with a load of 75%. That route achieves its load and a an average fare of €150 per passenger. It's profitable. Now factor in the €10 tax. If you try to get the average fare up to €160, the load will drop and if that drop is more than 3%, the route loses money. If you charge €150, you get €140 net; the route loses money.

And there are a lot of routes out there that are that marginal.

So, basically, the charge is killing marginal routes.

Not only that, it has a worse effect on inbound tourism rather than outbound. Irish people are generally going to pay up for an overseas holiday and as the charge effects everywhere, they'll pay it. But if you're British, French, German etc., you have a choice of destinations. Many will decide against Ireland.
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